Tuesday, February 26, 2013

TAKING A RISK-BASED APPROACH TO SUSTAINABILITY AND OPERATIONAL EXCELLENCE IN MANUFACTURING

Manufacturing risks extend beyond
the boundaries of the site

Risk management tools are employed in some shape or form on most manufacturing sites. The two most common areas in which they are used are for safety and plant maintenance purposes, where risk- based approaches are used to identify potential failures and devise mitigation strategies to prevent these failures from occurring. In theory, the development of integrated quality management systems encompassing safety, food safety, product quality, environmental issues and more recently issues such as energy efficiency should involve some kind of risk assessment. In fact, a risk assessment should be the foundation of such systems. 

For reasons I refer to below, many organisations tend to gloss over this important step and their risk registers are not as comprehensive as they should be. They tend to identify risks through some kind of brainstorming process, which is not in itself a bad approach, but can lead to a “high-level” assessment of operational risks if the process is not sufficiently focused. The problem in manufacturing environments is that some very large risks tend to have very small origins – the v-belt that is not tensioned correctly and catches fire, burning down the facility; the valve that passes and contaminates large quantities of food products; the extraction fan that is never switched on and increases long-term occupational health problems for employees through solvent inhalation....I could go on. While management teams can and must identify strategic risks, operational excellence is largely about small details.

One of the major impediments to rigorous risk assessment is that it is resource-intensive. In the maintenance environment, Reliability Centered Maintenance (RCM) is an example of an approach that is shunned due to the amount of resources required to partition a manufacturing plant to the required level of detail, identify failure modes at the component level and then devise maintenance tasks to prevent failures using decision trees. However, without making this investment in time upfront, potentially catastrophic failures can go unidentified, and while the maintenance programme may be improved after such failures occur, the costs incurred in learning lessons in this way can be very high.  

A second challenge for those wishing to identify risks comprehensively is that this requires subject matter expertise. If a group of people spends a considerable amount of time conducting risk assessments but lacks this expertise, the chances are the risk assessment will have serious shortcomings. So resources will ultimately be committed but wasted, leading to disillusionment with the process when unforeseen incidents occur. It is therefore vital that significant investments are made in technical training and coaching, in order to equip employees to participate productively in risk assessment events.

By now you can see where I am going with this. Comprehensive, rigorous risk assessment is an essential element of any strategy aimed at sustainable, stable, continuously improving operational performance. Of course, risk assessment is only the first step, solutions still need to be developed and implemented to mitigate each individual risk in order to realise the benefits. The philosophy is simply that if we can identify and mitigate every risk, we will achieve excellence. This is in essence a lofty goal, since in practical terms, we will never be able to prevent every potential incident. However, if we try our best to eliminate every risk, those that remain will be small in number, and can be handled as they arise in line with PDCA. If we chose to deal with every risk after the fact with no risk identification upfront, we would be fire-fighting, and if your facility tends to operate in an unstable fashion, chances are your risk management practices need review.

The machinery through which risks are mitigated is comprised of the various management systems in place. Quality Management Systems specify overarching policies, how manufacturing process units should be operated, the parameters to be measured, reporting, corrective actions and the like – essentially everything that needs to be in place to ensure that excellent product quality, high levels of safety, responsible environmental performance and other key objectives are realised. These are however not the only systems through which risks may be managed. Preventive maintenance programmes are a vital component of risk management in the manufacturing environment. Human resource risks also require serious consideration, and require standardised and rigorous processes and standards for their management. Cost control procedures are a further example of tools employed to manage risk. Many of these supporting systems reside in IT platforms. The organisations that are best at developing and implementing quality management systems integrate these disparate systems into the overall quality management system through explicit linkages.  In general, the greater the number of unique systems you have to integrate, the more difficult the task, and if you could build an integrated system from the ground up you would have the ideal management system.

The complexity of quality management systems and the other programmes manufacturers may be implementing at any point in time (such as continuous improvement programmes for example) can lead to bureaucracy and confusion. In many cases a fixation with the system rather than its efficacy means that results are erratic and do not exhibit sustainable improvement. I am not knocking quality management systems or continuous improvement programmes, both of which are important vehicles for the achievement of operational excellence and sustainability. I do however believe that there is a need for manufacturers to “get back to the basics” insofar as obtaining and harnessing a fundamental knowledge of their operations is concerned. Risk assessment provides an ideal vehicle for doing so. It does however mean examining physical and business processes in minute detail, and yes, this is time consuming and requires a lot of skill and knowledge to do effectively. Once this has been done, the mitigation measures developed, if implemented rigorously, will however go most of the way towards solid, repeatable operational performance. Quality management systems provide the ideal vehicle for execution of these mitigation measures. Continuous improvement programmes require this sound foundation to be effective. Risk assessment therefore lies at the heart of the well-oiled manufacturing machine, particularly if the same approach used to identify risks is also used to unearth opportunities.  In a future post I will give you an example of a detailed, integrated, process-level risk assessment that will illustrate how powerful this approach can be as a platform for operational excellence and sustainability.

Copyright © Craig van Wyk, 2013. All rights reserved